NewEnergyNews: TODAY’S STUDY: ANOTHER TRY FOR A CLEAN ENERGY STANDARD/

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YESTERDAY

THINGS-TO-THINK-ABOUT WEDNESDAY, August 23:

  • TTTA Wednesday-ORIGINAL REPORTING: The IRA And The New Energy Boom
  • TTTA Wednesday-ORIGINAL REPORTING: The IRA And the EV Revolution
  • THE DAY BEFORE

  • Weekend Video: Coming Ocean Current Collapse Could Up Climate Crisis
  • Weekend Video: Impacts Of The Atlantic Meridional Overturning Current Collapse
  • Weekend Video: More Facts On The AMOC
  • THE DAY BEFORE THE DAY BEFORE

    WEEKEND VIDEOS, July 15-16:

  • Weekend Video: The Truth About China And The Climate Crisis
  • Weekend Video: Florida Insurance At The Climate Crisis Storm’s Eye
  • Weekend Video: The 9-1-1 On Rooftop Solar
  • THE DAY BEFORE THAT

    WEEKEND VIDEOS, July 8-9:

  • Weekend Video: Bill Nye Science Guy On The Climate Crisis
  • Weekend Video: The Changes Causing The Crisis
  • Weekend Video: A “Massive Global Solar Boom” Now
  • THE LAST DAY UP HERE

    WEEKEND VIDEOS, July 1-2:

  • The Global New Energy Boom Accelerates
  • Ukraine Faces The Climate Crisis While Fighting To Survive
  • Texas Heat And Politics Of Denial
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    Founding Editor Herman K. Trabish

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    WEEKEND VIDEOS, June 17-18

  • Fixing The Power System
  • The Energy Storage Solution
  • New Energy Equity With Community Solar
  • Weekend Video: The Way Wind Can Help Win Wars
  • Weekend Video: New Support For Hydropower
  • Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

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  • WEEKEND VIDEOS, August 24-26:
  • Happy One-Year Birthday, Inflation Reduction Act
  • The Virtual Power Plant Boom, Part 1
  • The Virtual Power Plant Boom, Part 2

    Wednesday, March 07, 2012

    TODAY’S STUDY: ANOTHER TRY FOR A CLEAN ENERGY STANDARD

    Analysis of Impacts of a Clean Energy Standard
    November 2011 (U.S. Energy Information Administration)

    Introduction

    This report responds to a request from Senator Jeff Bingaman, Chairman of the U.S. Senate Committee on Energy and Natural Resources, for an analysis of a national Clean Energy Standard (CES). The request, as outlined in the letter included in Appendix A, sets out specific policy assumptions for the study.

    Background

    A CES is a policy that requires covered electricity retailers to supply a specified share of their electricity sales from qualifying clean energy resources. Under a CES, electric generators would be granted clean energy credits for every megawatthour (MWh) of electricity they produce using qualifying clean energy sources. Utilities that serve retail customers would use some combination of credits granted to their own generation or credits acquired in trade from other generators to meet their CES obligations. Generators without retail customers or utilities that generated more clean energy credits than needed to meet their own obligations could sell CES credits to other companies.

    The design details of a CES can significantly affect its projected impacts. Chairman Bingaman’s request sets out a base CES specification and several variants. The base CES specification, henceforth referred to as the Bingaman CES (BCES) case, has various provisions describing the definition of clean energy, the allocation of credits, and the dates when target milestones become binding, as described below:

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    • All generation from existing and new wind, solar, geothermal, biomass, municipal solid waste, and landfill gas plants earns full BCES credits.
    • Incremental hydroelectric and nuclear generation from capacity uprates at existing plants and from new plants earns full BCES credits.
    • Generation from existing nuclear and hydroelectric capacity does not receive any BCES credits. However, the total generation from these two sources counts towards the overall clean energy sales goal of the policy. Generation from these sources is reflected in the policy through a reduced requirement for holding BCES credits.
    • Partial BCES credits are earned for generation using specific technologies fueled by natural gas or coal, based on a calculated crediting factor that reflects the carbon intensity of each technology relative to that of a new supercritical coal plant. These technologies include coal plants which capture and sequester their carbon dioxide emissions (0.9 BCES credits), natural gas plants that also sequester their carbon dioxide emissions (0.95 BCES credits), existing natural gas combined-cycle units (0.48 BCES credits), new gas combined-cycle units (0.59 BCES credits), existing gas combustion turbines (0.16 BCES credits), new gas combustion turbines (0.45 BCES credits), and integrated gasification combined-cycle (IGCC) coal plants without carbon capture (0.15 BCES credits).
    • The BCES target for the share of retail electricity sales from clean energy sources starts at 45 percent in 2015 and ultimately reaches 95 percent in 2050. However, as noted above, the requirement to hold BCES credits is generally reduced by generation from existing nuclear and hydroelectric capacity, which counts toward the clean energy targets but does not earn BCES credits.

    • Table 1 below shows both the overall BCES case clean energy targets and the estimated requirement for covering sales with BCES credits given projected generation from existing nuclear and hydroelectric capacity. For example, in the Reference case1projection for 2035, these generation sources account for about 24 percent of sales, so the 80-percent clean energy goal requires that 56 percent (80 percent minus 24 percent) of sales be covered by BCES credits

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    • BCES clean energy goals increase linearly between the milestones shown in Table 1, with a 2-percentage point annual increase between 2020 and 2035 and a 1-percentage point annual increase in the first 5 years of the BCES and between 2035 and 2050.
    • There is no sunset date for the requirements, so the 95-percent clean energy goal remains in effect beyond 2050.
    • All electricity providers are covered by the requirement, regardless of ownership type or size.
    • BCES credits can be banked for use in a subsequent year. There is no limit on how many credits may be held or for how long they may be held.
    • The BCES operates independently of any State-level policies. The same underlying generation can be used to simultaneously comply with the BCES and any State generation requirements, if otherwise allowed for by both Federal and State law.

    Like other EIA analyses of energy and environmental policy proposals, this report focuses on the impacts of those proposals on energy choices in all sectors and the implications of those decisions for emissions and the economy. This focus is consistent with EIA's statutory mission and expertise. The study does not account for any possible health or environmental benefits that might be associated with the BCES policy.

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    Alternative Cases

    As noted above, Chairman Bingaman also requested that several variations of the base CES specification be analyzed. The first three cases listed, the All Clean, Partial Credit, and Revised Baseline cases, examine several alternative treatments for existing nuclear and hydroelectric generation facilities, giving them either a partial or a full credit for generation. The Partial Credit case also includes an alternative treatment for the crediting of qualifying fossil generation.

    All Clean case (AC…Partial Credit case (PC)… Revised Baseline case (RB)…Small Utilities Exempt case (SUE)…Credit Cap 2.1 case (C2.1)…Credit Cap 3.0 case (C3.0)…Standards and Codes case (S+C)…

    With the exception of the SUE case, all of the alternative cases described above share the goal in the BCES case of covering 80 percent of total national sales with generation from clean energy by 2035. However, the number of credits required in each case varies because of differences in the sales baselines and the number of credits assigned to different technologies, particularly with respect to the treatment of generation from existing hydroelectric facilities and nuclear plants (Table 2). In the BCES, AC and PC cases all sales are covered by the credit program. In the RB case, covered sales are reduced by the generation from existing hydroelectric and nuclear plants and, in the SUE case, they are reduced by sales from small utilities.

    Focusing on 2035, in the BCES case 56 percent of total sales must be covered by credits. As described above, the credit share required in the BCES case is below the 80 percent clean energy goal because projected generation coming from existing hydroelectric and nuclear plants does not earn credits but still counts towards the overall clean energy goal. In the AC case, the share of sales that must be covered by credits equals the overall clean energy goal because all generation from hydroelectric and nuclear plants, whether existing or new, earn credits. In the PC and RB cases, the share of total sales that must be covered by credits is very similar to that in the BCES case. The shares are slightly higher in the PC case because generation from existing hydroelectric and nuclear plants earns a small share of credits in this case. In the SUE case, the share of total sales that must hold credits is significantly lower than in the BCES case because sales from small utilities are not required to hold credits. These small utilities account for roughly 25 percent of sales so the overall credit share required is lower by about that amount.

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    Results

    BCES case impacts relative to the AEO2011 Reference case

    The BCES policy changes the generation mix, reducing the role of coal technologies and increasing reliance on natural gas, non-hydro renewable and nuclear technologies (Figure 1, Tables B1 and B2). Coal-fired generation, which in the Reference case increases by 23 percent from 2009 to 2035, decreases by 41 percent in the BCES case over the same period. Relative to the Reference case, where natural gas generation grows steadily throughout the projection period, natural gas generation in 2025 is 34-percent higher and 53-percent higher in 2035. Under the BCES policy, non-hydro renewable technologies grow at the fastest rate, increasing from 146 billion kilowatthours in 2009 to 601 billion kilowatthours in 2025 and 737 billion kilowatthours in 2035. These totals are 60 percent and 75 percent greater than the 2025 and 2035 Reference case projections, respectively.

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    The BCES case provides different incentives to existing and new nuclear power plants because only the latter earn credits. Nearly 65 gigawatts of new capacity are installed by 2035 in the BCES case compared to approximately 6 gigawatts in the Reference case. Generation from existing nuclear plants does not qualify for credits and, as a result, more than 14 gigawatts of this capacity are taken out of service, while less than 2 gigawatts of capacity are retired in the Reference case.

    Since fossil-fueled generation that captures and sequesters carbon emissions is given nearly full BCES credit, the BCES spurs 47 gigawatts of coal capacity to be retrofitted with carbon capture and sequestration (CCS) equipment by 2035. Nearly all of these retrofits occur in the final 10 years of the forecast period, with less than one gigawatt of capacity retrofitted by 2025. No new coal plants with CCS are added in the BCES case beyond the small amount found in the Reference case.

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    Among renewable sources, wind and biomass have the largest generation increases under the BCES (Figure 2, Tables B1 and B2). Under the BCES policy, 2035 wind generation is more than five times its 2009 level. Total 2035 wind generation under the BCES is more than double the 2035 level in the Reference case. Biomass generation shows robust growth, as well, within the BCES framework. All of the growth in biomass use relative to the Reference case is attributable to co-fired generation, which reaches 187 billion kilowatthours in 2025 before declining to 156 billion kilowatthours in 2035 as coal-fired plants that co-fire biomass are retired.

    Under the BCES, projected annual electricity sector carbon dioxide emissions are 22 percent below the Reference case level in 2025 and 43 percent lower in 2035 (Figure 3, Tables B1 and B2). In the Reference case electricity-sector carbon dioxide emissions increase modestly over the projection period, reaching annual emissions of 2,345 million metric tons of carbon dioxide (MMTCO2) in 2025 and growing further to 2,500 MMTCO2 emitted in 2035. Over the 2009-to-2035 period, cumulative CO2 emissions are 20 percent lower in the BCES case than they are in the Reference case.

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    The BCES has a negligible impact on electricity prices through 2022, but prices rise in later years. (Figure 4, Tables B1 and B2). In the early years of the projection period, there is negligible impact on average end-use electricity prices, as the requirement to hold BCES credits is modest. As shown in Table 1, the share of total sales that must be covered by credits does not exceed 45 percent until after 2030. This is important because, while coal-fired plants do not receive BCES credits, efficient combined cycle plants receive 0.48 credits for each megawatthour they generate, more than retailers purchasing their output are required to hold until after 2030. This effectively reduces the cost of most natural gas-fired generation until the later years of the projections. Electricity prices do grow later in the projections, reaching 21 percent above the Reference case level by 2035 in the BCES case.

    While average end-use electricity prices increase nationally after 2020 in the BCES case, the increase is not the same across all regions (Table 3). In 2025, when national average electricity prices in the BCES case are projected to be 3.6 percent above the Reference case level, regional projected prices are below the Reference case level in 8 of the 22 regions including New England (NEWE) and California (CAMX) which already have significant generation from eligible clean energy resources. By 2035, prices are below the Reference case level in only one region, MRO East (MROE), reflecting the significant share of qualified end-use generation projected to be co-produced in that region by facilities producing cellulosic biofuels to comply with the Federal Renewable Fuels Standard. The regions with the highest price increases in 2035 (by percent) are the SERC Central Region (SRCE) (69.2-percent increase) and the WECC Northwest Region (NWPP) (61.5-percent increase). The two regions with the highest increases in terms of cents per kilowatthour in 2035 are NPCC Long Island (NYLI), where prices increase by 5.2 cents/kWh and SERC Central (SRCE), where prices increase by 4.2 cents/kWh.

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    Natural gas prices also increase in the BCES case, particularly in the early years of the projections (Figure 4, Tables B1 and B2). Early in the projection, natural gas prices rise as generation from natural gas increases to comply with the BCES and bank credits for future use. As new capacity is built and other clean technologies continue to be expanded, the natural gas price premium over the Reference case gradually declines. Natural gas price impacts reach their height in 2016, where prices are $0.83/ thousand cubic feet (12 percent) higher than in the Reference case.

    Electricity expenditures increase in the BCES case after 2020 as a result of higher electricity prices (Figure 5, Tables B1 and B2). However, because electricity sales decrease later in the forecast period relative to the Reference case, the impact on electricity expenditures is smaller than the impact on electricity prices. In 2025 and 2035, total annual electricity expenditures across all sectors in the BCES case are 2.8 percent and 15.1 percent above the projected Reference case level, respectively. Household average annual electricity expenditures similarly increase over the projection horizon. In 2025, average household electricity expenditures are $1,198 in the BCES case – $36 above the Reference case. This difference increases to $170 in 2035 between the two cases ($1,366 versus $1,196).

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    Higher natural gas prices also lead to increased natural gas expenditures outside the electricity sector in the BCES case (Figure 6, Tables B1 and B2). In 2025, non-electric natural gas expenditures in the BCES case are 3.4 percent higher than Reference case levels. This differential increases to 6.5 percent by 2035. Natural gas expenditures in the electric power sector experience upward pressure from both higher prices and higher consumption, but the impact of those changes on ultimate consumers is reflected in their electricity expenditures.

    The BCES case reduces projected real Gross Domestic Product (GDP) relative to the Reference case, with a peak difference in the GDP level of less than half of one percent in 2035 and generally lower impact in earlier years. (Figures 7 and 8, Tables B1 and B2). GDP grows at an average annual rate of 2.67 percent between 2009 and 2035 in the BCES case, just slightly below the Reference case growth rate of 2.69 percent…

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